Meanwhile China's commerce ministry has denied a report by the official China Daily that it will cut quotas by 30% next year to stop overmining.

"The report is completely false," the ministry said in a statement.

"China will continue to supply rare earths to the world, and at the same time, to protect usable resources and sustainable development, China will also continue to impose restrictive measures on exploration, production and import and export of rare earths."

Threat to economy

The US Geological Survey recognises 17 different rare earths.

They are used in everything from catalytic converters in cars to computer monitors, TVs and in pharmaceuticals.

Analysts say without these elements, much of the modern economy would shut down.

The US, which is also a major buyer of rare earths, mined no rare earth elements last year.

US trade officials say they are now checking the New York Times report that China is blocking shipments to the US and Europe, following reports of a similar move against Japan.

The newspaper cited unnamed Chinese rare earths officials as saying that "the embargo is expanding".

Nefeterius McPherson of the US Trade Representative's office said: "We're seeking more information in keeping with our recent announcement of an investigation into whether China's actions and policies are consistent with WTO rules."

Washington is investigating whether China is violating international trade rules by subsidising its clean energy industries.

EU trade spokesman John Clancy told the BBC that he was unable to confirm claims made by European industry officials in media reports of China blocking shipments to the EU.

"Chinese Premier Wen Jiabao stressed at the recent EU-China Business Summit that China did not intend to take such action or close its market," Mr Clancy said in a statement.

He said rare earths were a key element of European industrial policy, and that the situation was being monitored closely.